Catch in Senate Health Insurance Compromise

Armen Hareyan's picture

The compromise made by Senate Democrats on healthcare reform has been accepted by most party members, moderate and liberal alike. The proposals, which include allowing people 55-64 year olds to buy into Medicare and creating national health insurance plans sold by private insurers with rates negotiated by the government (such as the current health insurance for federal employees), are not quite ideal for either side (especially those favoring a public option), but manage to bring reform closer to a reality.

However, there is a relatively little-publicized loophole in the plan. Cost containment is a laudable goal promoted by the Obama administration. Many conservative Democrats are also worried about the over $800 billion bill's impact on the national deficit. Program cuts and tax increases are needed to pay for part of the bill, but both are politically unpopular. Therefore, such provisions tend to be buried in the 2,000-plus page legislation. One of them will continue to allow health insurance companies to have annual limits for the medical care they will pay for.


Serious illnesses, such as cancer, can cost tens of thousands of dollars to treat each year. Advanced health care technology that extends life is normally very expensive, and health insurance pays for most of it. An aggressive course of treatment can bump up to or exceed such limits. Although the Senate bill - as well as the House of Representatives' version - bans lifetime caps on medical coverage, detractors claim that the ability to have annual caps subverts such a ban. For example, a disease in its later stages can cost over $100,000 to treat in a year.

According to the health care bill, health insurance providers will be forbidden from placing "unreasonable" annual dollar value limits on care; it tasks officials in the administration with determining what limits are allowed. This is very confusing and dismaying to health advocacy groups, such as the American Cancer Society. After all, the main purpose of health insurance is to protect against catastrophic financial loss resulting from medical expenses. Such limits are uncommon in health insurance provided by large employers, probably because the larger coverage pool spreads out the insurers' costs. Currently, individual and small group health insurance coverage limits vary among policies.

Nobody seems to know exactly how the modified language entered the bill, which is concerning. The House's version bans annual limits in addition to lifetime coverage limits on health insurance, but the Democrats' majority is more comfortable in that chamber. The bans would take effect as soon as the bill is signed by President Obama, unlike other aspects of reform that may take until 2013 to be fully enacted.

Written by Yamileth Medina
VitalOne Health Plans Direct, LLC.